One step at a time: Careful construction the formula for B2B exchanges

Whatever happened to B2B exchanges? Two years ago they were the hottest thing around. All the major industries, from steel to aerospace, wanted a piece of the action.

B2B exchanges were going to revolutionize supply chains, deliver big cost savings and make life easier for everyone. Unfortunately,

they failed to live up to their hype and fizzled out.

These days people talk about B2B exchanges in the same breath as the dot-com meltdown, if they talk about them at all. B2B exchanges may be in the dog house, but some are playing by a new set of rules. A case in point is Vancouver-based BuildDirect, a small B2B exchange that specializes in building products and materials. It represents 50 manufacturers in 12 countries, and sells to contractors mainly in the U.S., Canada, Europe and the Caribbean.

Revenue in 2002 was a modest $3 million, but that figure is expected to ramp up to $15 million in 2003, and $140 million in 2008. Another B2B pipe dream waiting to be trampled? “”Most B2B exchanges failed because they did not focus on the needs of the buyer,”” says Jeff Booth, president of BuildDirect. “”By eliminating middlemen, we bring the product to market with fewer touches. And that translates to lower prices for the end user.””

BuildDirect’s B2B platform also makes it possible for a contractor in Montana or Kingston, Jamaica to get a quote on purchasing a quantity of tiles from Turkey, shipping, handling and duties included, in a matter of seconds.

The latest addition to BuildDirect’s B2B exchange is a sophisticated pricing engine for lumber products, expected to be launched at the end of 2003 with partial funding from Industry Canada, that will allow small mills in this country to sell more product into the US$3.9-trillion global market for construction materials.

Building monster B2B exchanges from the top down did not work. Maybe building them from the bottom up, one step at a time, is the answer.

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Jim Love, Chief Content Officer, IT World Canada

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